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1) find out the amount of manufacturing overhead given the following information:

Depreciation on a factory building             $6,650  
Telephone expense in factory office             $980  
Telephone expense in sales showroom     $1,050  
Factory foreman's salary                         $4,900  
Maintenance costs for the factory             $1,400  
Maintenance costs for the sales showroom    $690

a) $11,130.
b) $13,220.
c) $15,670.
d) $13,930.

The following information has been taken from the perpetual inventory system of Elite Mfg. Co. for the month ended August 31:

Purchase of direct materials    $ 62,000  
Direct materials used    $ 41,500  
Direct labor costs assigned to production    $ 22,000  
Manufacturing overhead costs incurred (and applied)    $ 35,000  
 
 Balances in inventory    August 31    August 1
 Materials                        $ ?            $ 22,000  
 Work in Process    $ 67,000           $ 48,000  
 Finished Goods    $ 51,000           $ 43,600

2) The total amount of inventory to be included in Elite's August31st balance sheet amounts to:

a) $138,500.
b) $202,000.
c) $160,500.
d) Some other amount.

3) Total manufacturing costs charged (debited) to Work in Process during August amount to:

a) $57,000.
b) $120,500.
c) $98,500.
d) Some other amount.

4) The cost of finished goods manufactured in August is:

a) $133,500.
b) $79,500.
c) $61,000.
d) Some other amount.

5) The cost of goods sold in August is:

a) $72,100.
b) $7,400.
c) $123,100.
d) Some other amount.

6) The cost of finished goods manufactured in August is:

a) $133,500.
b) $79,500.
c) $61,000.
d) Some other amount.

7) The cost of goods sold in August is:
a) $72,100.
b) $7,400.
c) $123,100.
d) Some other amount.

8) Marty's Metal Shop uses a job order cost system. It applies overhead to jobs at a rate of 140% of direct labor costs. Job No. 2617 required $920 in direct labor costs. The job was initially budgeted to require $870 in direct labor costs. Overhead applied to Job No. 2617 during the period amounted to:
a) $870.
b) $1,288.
c) $1,650.
d) Some other amount.

Capri Boat Corporation uses a job order cost system and applies overhead based on a percentage of direct labor cost. Cost flows through the Work in Process Inventory account during March are given below:
Work in Process
Beginning Balance    0        Transferred Out    243,500  
Direct Materials    71,000           
Direct Labor    101,000           
Overhead    151,500           
Ending Balance    80,000           
Only Job #007 was still in process at the end of March and this job had been charged with $27,000 in direct materials cost.

9) The amount of direct materials cost charged to completed jobs during March was:

a) $13,500.
b) $50,500.
c) $44,000.
d) Some other amount.

10) The predetermined overhead application rate at Capri Boat is what percentage of direct labor costs?

a) 150%.
b) 300%.
c) 53%.
d) 67%.
 
11) The amount of overhead costs applied to Job #007 during March was:

a) $31,800.
b) $21,200.
c) $74,000.
d) $53,000.

12) Riverview Company's budget for the coming year includes $8,000,000 for manufacturing overhead, 50,000 hours of direct labor, and 200,000 hours of machine time.
Refer to the above data. If Riverview applies overhead using a predetermined rate based on machine-hours, what amount of overhead will be assigned to a unit of output which requires 0.9 machine hours and 0.30 labor hours to complete? (Round your intermediate calculations to the nearest whole number.)

a) $36.00.
b) $48.00.
c) $40.00.
d) Some other amount.

13) Refer to the above data. If Riverview applies overhead using a predetermined rate based on labor-hours, what amount of overhead will be assigned to a unit of output which requires 0.9 machine hours and 0.30 labor hours to complete?

a) $4.00.
b) $48.00.
c) $40.00.
d) Some other amount.

14)If the unit sales price is $7 and variable costs are $3, how many units have to be sold to earn a profit of $3,600 if fixed costs equal $5,000?

a) 900.
b) 1,250.
c) 5,900.
d) 2,150.

15) If the unit sales price is $26, variable costs are $13 per unit and fixed costs are $14,000, how many units must be sold to earn an income of $260,000?

a) 18,923.
b) 1,077.
c) 21,077.
d) 20,000.

The following information is available regarding the total manufacturing overhead of Olsen Company for a recent four-month period.
Machine Hours    Mfg. Overhead
April    66,000      $ 174,000  
May    50,000      $ 157,000  
June    103,000      $ 204,700  
July    99,000      $ 185,000

16) Using the high-low method, compute the variable element of manufacturing overhead cost per machine hour.

a) $2.38 per machine hour.
b) $.33 per machine hour.
c) $.83 per machine hour.
d) $.90 per machine hour.

17) Using the high-low method, compute the fixed element of Olsen's monthly overhead cost. (Round per machine hour cost to 2 decimal paces.)

a) $84,680.
b) $47,700.
c) $112,000.
d) $98,000.

18) Olsen's projected August operations will require approximately 130,000 machine hours. Using the high-low method, compute total manufacturing overhead estimated for August. (Round per machine hour cost to 2 decimal paces.)

a) $157,000.
b) $62,000.
c) $177,700.
d) $229,000.

19) If monthly fixed costs are $31,000 and the contribution margin ratio is 32%, the monthly sales volume required to break even is:

a) $9,920.
b) $96,875.
c) $106,795.
d) $40,920.

The following information is from the manufacturing budget and budgeted financial statements of Altman Corp.:
Direct materials inventory, 1/1    $ 95,000  
Direct materials inventory, 12/31    $ 111,000  
Direct materials budgeted for use during year    $ 353,000  
Accounts payable to suppliers, 1/1    $ 63,000  
Accounts payable to suppliers, 12/31    $ 73,000

20)For the year, budgeted purchases of direct materials amounted to:

a) $359,000.
b) $369,000.
c) $337,000.
d) $379,000.

21) For the year, budgeted cash payments to suppliers amounted to:

a) $337,000.
b) $379,000.
c) $359,000.
d) $369,000.

22) On March 1, Hugh Corporation plans to borrow $590,000 from the Scotland State Bank by signing a 9%, 15-year note payable. The note calls for 180 monthly payments of $5,980, which includes both interest and principal components.
Hugh's budgeted interest expense for March is:

a) $4,425
b) $295.
c) $1,555.
d) $5,980.

23) Of Hugh's budgeted debt service cost of $5,980 in March, the amount applied to the principal of the note totals:

a) $5,980.
b) $1,555.
c) $4,425.
d) $295.

24) Ross Corporation makes all sales on account. The June 30th balance sheet balance in its accounts receivable is $450,000, of which $240,000 pertain to sales that were made during June. Budgeted sales for July are $1,300,000. Ross collects 70% of sales in the month of sale; 10% in the following month; and the final 20% in the second month after the sale
What are Ross's budgeted collections for July?

a) $990,000.
b) $1,144,000.
c) $1,150,000.

d) $976,000.

25) What is the budgeted balance of Ross's accounts receivable as of July 31?

a) $976,000.
b) $550,000.
c) $1,150,000.
d) $1,144,000.

On October 1 of the current year, Molloy Corporation prepared a cash budget for October, November, and December. All of Molloy's sales are made on account. The following information was used in preparing estimated cash collections:
August sales (actual)    $ 31,000  
September sales (actual)    $ 41,000  
October sales (estimated)    $ 11,000  
November sales (estimated)    $ 61,000  
December sales (estimated)    $ 51,000  
Approximately 65% of all sales are collected in the month of the sale, 20% is collected in the following month, and 15% is collected in the month thereafter.

26) Budgeted collections from customers in October total:

a) $23,850.
b) $83,000.
c) $15,350.
d) $20,000.

27) Budgeted collections from customers in November total:

a) $41,850.
b) $113,000.
c) $48,000.
d) $49,500.

28) Budgeted collections from customers in December total:

a) $44,500.
b) $123,000.
c) $47,000.
d) $45,350.

29) If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit, then the total materials cost variance is:

a) $2,850 Unfavorable.
b) $1,575 Unfavorable.
c) $1,275 Favorable.
d) $2,850 Favorable.

30) James Inc.'s flexible budget for June, based upon actual output, called for the use of 9,800 pounds of materials at a standard cost of $6.70 per pound. The Production Department actually used 10,000 pounds of materials costing $6.40 per pound during June. James's materials price variance for June is:

a) $3,000 unfavorable.
b) $3,000 favorable.
c) $2,940 favorable.
d) $2,940 unfavorable.

31) The materials quantity variance for James's June operations is:

a) $2,940 favorable.
b) $3,000 unfavorable.
c) $1,340 unfavorable.
d) $3,000 favorable.

32) The journal entry to record the cost of direct materials used in June includes each of the following except:

a) A credit to Materials Price Variance of $3,000.
b) A debit to Materials Quantity Variance of $1,340.
c) A credit to Direct Materials Inventory of $65,660.
d) A debit to Work-in-Process Inventory of $65,660.

Helicopter Gear is planning to expand its product line, which requires investment of $470,400 in special-purpose machinery. The machinery has a useful life of six years and no salvage value. The estimated annual results of offering the new products are as follows:
Revenue    $ 524,000   
Expenses (Including straight-line depreciation)    (498,400)  
Increase in net income    $ 25,600   
All revenue from the new products and all expenses (except depreciation) will be received or paid in cash in the same period as recognized for accounting purposes.

33) The payback period for this proposed investment is:

a) 4.5 years.
b) 9.2 years.
c) 2.3 years.
d) 6.0 years.

34) The return on average investment for this proposed investment is:

a) 5.44%.
b) 44.22%.
c) 4.89%.
d) 10.88%.

35) Compute the net present value of this proposed investment, using a discount rate of 15%. (An annuity table shows that the present value of $1 received annually for six years, discounted at 15%, is 3.784.)

a) $366,400.
b) $393,536.
c) $104,000.
d) ($76,864).

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9909

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